OneWeb Turns To UK Government For Lifeline

Struggling UK tech company OneWeb has turned to its national government for support. The satellite firm declared itself bankrupt last month after a hoped-for investment from the Japanese mega-company Softbank fell through. Now, it is hoping that the UK government will provide the financial stability OneWeb needs to revive the business.

Oneweb network
The company had planned for a constellation of 600 LEO satellites. Photo: OneWeb

OneWeb appeals for a lifeline

The UK based company OneWeb filed for Chapter 11 bankruptcy protection in the USA at the end of March. Despite achieving several successful launches of its low Earth Orbit satellites, it was still seeking around a $2bn investment to move forward. Softbank had been negotiating for this investment, but pulled out, leaving the firm stranded.

Although the firm filed for bankruptcy and axed the majority of its employees, there remains a glimmer of hope. At least, that appears to be the case, as OneWeb is reported by the Telegraph to have, this week, written to Downing Street to ask for a bailout.

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In the letter to the Prime Minister, OneWeb reportedly offered to move its entire operation to the UK from Florida. The letter elucidated on the benefits to the UK as a whole, focusing on the increased security that could be ensured with a homegrown business in town. It also pledged OneWeb’s support in delivering on the government’s commitment to bring faster broadband to rural communities by 2025.

Oneweb factory
The firm had opened a major factory in Florida last year. Photo: OneWeb

Along with all the positives, OneWeb also issued a stark warning. Without the support of the government-backed loan, its company would fail, and its valuable technological developments would end up outside of the UK.

How much does OneWeb need?

Clearly, the UK government is not going to be offering the $2bn OneWeb was seeking from Japanese backer Softbank. Neither will it be keen to stay in the game for the rest of the money OneWeb needs. Despite already securing investments totaling $3.4 bn, around twice that is estimated to be required to fund the rest of the LEO project.

Just a fraction of that is on offer by the UK government, with loans reaching a maximum of £25m ($31m) per business. Undoubtedly, the government will be wondering what difference a relatively small amount such as this could hope to have on a big spender like OneWeb.

A government spokesperson told the Telegraph,

“The government put together a far-reaching package of support to help businesses and their employees through this very challenging time. We are in regular discussions with the space industry, including OneWeb, on how best it can be supported.”

The risk of letting OneWeb fail

As well as seeing a worthwhile investment, the UK government will be contemplating what’s at risk if OneWeb is left to fail. So far, it had launched only 74 of its 648 planned LEO satellites, a network that aimed to connect ‘everyone, everywhere’ around the world.

Oneweb satellite
OneWeb planned for much-needed capacity in the Arctic Circle. Photo: OneWeb

One of the most eagerly anticipated elements of the OneWeb network was its promise to provide almost 400Gbps of capacity in the Arctic region. This would have brought capacity to 200 times what it is right now. The OneWeb mission was viewed as critical by communities living about the 60th parallel North, such as those in northern Alaska.

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However, aside from this, the company’s efforts are seen as somewhat absorbable in terms of the development of LEO networks in general. Quilty Analytics published a report earlier this month, as shared in AdvancedTelevision, which suggested LEO broadband would not be negatively affected overall by the exit of OneWeb. The report stated,

“OneWeb suffered from a significant first-mover disadvantage, a competitively inferior system (as a result of early design decisions and trade-offs), and inadequate financing (largely due to investor skepticism). In short, we don’t think that OneWeb’s demise is indicative of the prospects for LEO Broadband as a whole.”

Whether the UK government will come to the same conclusion remains to be seen.